You may have been hearing more and more about Bitcoin over the past few years; it is being heralded as the money of the future. What’s fascinating about Bitcoin, however, is that it’s not actually money.

What is it?

According to its website, Bitcoin is "a consensus network that enables a new payment system and a completely digital money." This means that there is no central controller; it is powered by its users and virtual coins are traded, creating a new payment system of “cryptocurrency.”

Cryptocurrency uses cryptography to control its transactions as opposed to banks or financial institutions. In Bitcoin, there is no bank backing its virtual transactions; coins are valued because users value them.

Acquiring Bitcoins

To users, Bitcoin is simply a way to complete Bitcoin transactions; it is an eWallet. People acquire bitcoins by purchasing them at a Bitcoin exchange, exchanging coins or competitive mining.

No Ownership

The creators of the Bitcoin site compare Bitcoin technology to email - nobody actually owns the technology, but people do need to have compatible software in order to use it. Bitcoin can only work with a consensus among the users, so everyone has a vested interest to protect the consensus.

Do People Use it?

Yes. In August 2013, the value of all bitcoins in circulation exceeded $1.5 billion. A number like that only comes about through daily use of large numbers of bitcoins.